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Orpheus Energy Limited (Formerly Australian Motor Finance Group Limited)

ABN 67 121 257 412

Annual Report

for the year ended 30 June 2011

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Contents

CORPORATE INFORMATION .......................................................................................................................... 3

DIRECTORS’ REPORT ..................................................................................................................................... 4

CORPORATE GOVERNANCE STATEMENT ................................................................................................ 17

STATEMENT OF COMPREHENSIVE INCOME ............................................................................................. 21

STATEMENT OF FINANCIAL POSITION ....................................................................................................... 22

STATEMENT OF CHANGES IN EQUITY ....................................................................................................... 23

STATEMENT OF CASH FLOWS .................................................................................................................... 23

NOTES TO THE FINANCIAL STATEMENTS ................................................................................................. 24

1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES ................................................................ 24

2 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES ...................................................... 39

3 REVENUES AND EXPENSES .............................................................................................................. 42

4 INCOME TAX ......................................................................................................................................... 42

5 EARNINGS (LOSS) PER SHARE ......................................................................................................... 43

6 CASH AND CASH EQUIVALENTS ....................................................................................................... 43

7 TRADE AND OTHER RECEIVABLES .................................................................................................. 44

8 OTHER FINANCIAL ASSETS (NON-CURRENT) .................................................................................. 44

9 TRADE AND OTHER PAYABLES ......................................................................................................... 45

10 BORROWINGS ...................................................................................................................................... 45

11 ISSUED CAPITAL AND RESERVES .................................................................................................... 46

12 COMMITMENTS AND CONTINGENCIES ............................................................................................ 47

13 EVENTS AFTER BALANCE DATE ....................................................................................................... 47

14 RELATED PARTY DISCLOSURE ......................................................................................................... 48

15 DIRECTOR AND EXECUTIVE DISCLOSURES .................................................................................... 49

16 AUDITORS’ REMUNERATION ............................................................................................................. 51

17 SEGMENT NOTE .................................................................................................................................. 51

DIRECTORS’ DECLARATION ........................................................................................................................ 52

INDEPENDENT AUDITOR’S REPORT .......................................................................................................... 53

ASX ADDITIONAL INFORMATION ................................................................................................................. 55

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Corporate Information

Orpheus Energy Limited (formerly Australian Motor Finance Group Limited) ACN 121 257 412 This annual report covers Orpheus Energy Limited (formerly Australian Motor Finance Group Limited) as an individual entity. The Company's functional and presentation currency is Australian Dollars AUD ($). A description of the Company's operations and of its principal activities is included in the review of operations and activities in the directors' report on pages 4 to 14. The directors' report is not part of the financial report. Directors in office at date of report

Wayne Mitchell (Chairman) Wesley Harder Anthony King David Smith Company Secretary

Nathan Bartrop (appointed 1 April 2011) Registered office and Principal place of business

Level 5 44 Miller Street North Sydney NSW 2060 T 61 2 9922 3930 F 61 2 9929 6820 Share Register

BoardRoom Pty Ltd Level 7, 207 Kent Street Sydney, SW 2000 T 61 2 9290 9600 F 61 2 9279 0664 www.boardroomlimited.com.au Solicitors

Whittens Eurotower Level 5, 137-139 Bathurst Street Sydney NSW 2000 Auditors

Hall Chadwick Level 29 31 Market Street Sydney NSW 2000

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Directors’ Report

The Board of Directors of Orpheus Energy Limited (formerly Australian Motor Finance Group Limited) submits this report in respect of the financial year ended 30 June 2011. Directors The names of the directors in office during or since the end of the financial year and up to the date of this report are: Mr Wayne Mitchell, Chairman (appointed 30 November 2010) Mr Wesley Harder, Executive Director & Exploration Manager (appointed 30 November 2010) Mr Anthony King, Non-executive Director (appointed 30 November 2010) Mr David Smith, Non-executive Director (appointed 18 August 2011) Mr David Hickie, Non-executive Director (resigned 30 November 2010) Mr Bruce Andrew, Non-executive Director (resigned 30 November 2010) Mr Ilmars Draudins, Non-executive Director (resigned 30 November 2010) Mr Mark Menzies, Non-executive Director (resigned 30 November 2010) Mr Jon O’Callaghan, Non-executive Director (resigned 30 November 2010) Details of the qualifications and experience of the directors in office during the financial year and until the date of this report are as follows: Directors in office at the date of this report: Wayne Mitchell Executive Chairman and CEO

Mr Wayne Mitchell is a qualified accountant with over 30 years of extensive senior management experience in the natural resource sector; both in Australia and in South East Asia. In the early 1970's, Mr Mitchell and two partners were the initial promoters and developers of Thailand's major zinc deposit located at Mae Sot, Northern Thailand. This resource is now owned and operated by a Thai public company, Padaeng Industry Company Ltd. Mr Mitchell specializes in the areas of financial planning, fund raising and project evaluation. He is also a past Chairman of listed company Central Victorian Gold Mines N.L and a director of Diversified Mineral Resources NL where he initiated and led the project team for the Burton Downs Coal project taken over by Portman Mining before being sold for more than $200 million. Mr Mitchell is a co- founder and chairman of Coalworks. Mr Mitchell was appointed to the board on 30 November 2010. Mr Mitchell is also a director of Coalworks Limited.

Wesley Harder Director and Exploration Manager

Mr Harder is a former coal analyst with Jackson Ltd stockbrokers and has also worked with a number of stockbrokers, including Ord Minnett and Frank Renouf. He has also worked as a field exploration geologist for fifteen years in Australia and its near neighbours including Sumatra and Irian Jaya in Indonesia, mainland Papua New Guinea and New Britain Island, many parts of the Solomon Islands and Fiji. In Australia he worked in the states of New South Wales, Queensland, Northern Territory and Tasmania. He has worked in tropical and arid environments searching for a range of mineral commodities including gold, copper, coal and uranium for such major companies as Newmont Mining Inc., Placer Prospecting Ltd and Pancontinental Mining Limited and Gujarat NRE Coking Coal Ltd. He was a Founding Director & CEO of Zinico Resources NL and its successors for 5 years and Mr Harder is a founding shareholder of Coalworks. Mr Harder was appointed to the board on 30 November 2010. Mr Harder is also a director of Commissioners Gold Limited (ASX:CGU).

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Directors’ Report (continued)

Directors (continued) Directors in office at the date of this report (continued): Anthony King

Mr King is a professional Metallurgist and qualified geologist with over 20 years operational and technical experience within the resource industry. A graduate of the University of Cape Town South Africa, Mr King worked for Cominco in the mid 70s as geologist in the field carrying out exploration programs and later held senior positions as Company Chemist for Ardlethan Tin, Gold Copper Exploration Pty Ltd and Great Northern Mining Corporation Ltd. During this time he completed another degree in Earth Science at Macquarie University, Sydney and in 1987 established Tableland Analytical, of which he is principal providing mill, processing design, assay and metallurgical services to the resource industry. Mr King is a former director of Allegiance Mining NL where he was General Manager – Operations. He has also been involved in design and construction of coal washing plants and has participated in a wide variety of resource projects. Mr King was appointed to the board on 30 November 2010.

David Smith Mr Smith is an investment banker of 15 years experience, and was most recently at BBY Limited where he was Head Equity Capital Markets and a member of the group's Executive and Risk Management Committee.

Mr Smith joined BBY in 2004 and since that time, BBY's Corporate Finance division raised more than $4 billion for its corporate clients and now maintains regular Top 15 positions in the various Australian Investment Banking League Tables.

He has extensively advised corporate clients in the bulk commodities sectors of coal and iron ore. In 2008, the BBY Corporate Finance division won the "Best Corporate Deal of the Year" award at the Australian Stockbrokers Foundation Awards for a coal sector client.

Mr Smith maintained a Top 10 ranking in the annual SMH Age East Coles Investment Banking surveys from 2008-2010. Prior to joining BBY, he worked at Ord Minnett and then JPMorgan Chase.

Mr Smith was appointed to the board on 18 August 2011. Mr Smith is also a co-founder and a director of Coalworks Limited.

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Directors (continued) Directors in office during or since the financial year who are not in office at the date of this report: David Hickie

David Hickie has over 35 years experience in banking, finance and funds management. His experience extends across the banking, building society, friendly society and credit union movement.

Mr. Hickie has had extensive experience in the management of various listed and unlisted trusts, including Mortgage and Property Trusts, Mortgage Securitisation, Equity Funds, Healthcare / Hospital Funds and Master Superannuation Funds. David was a non-executive director of the Société Générale Australia Limited securitisation conduits, ACE Limited, ACE Funding Limited, AUSTRA Limited and HOMES Limited with over $7.8b under management and is now providing consulting for structured finance to a number of companies locally as well as offshore. Mr Hickie was appointed to the board on 30 June 2008. Mr Hickie resigned from the board from 30 November 2010.

Bruce Andrew B Bus, CPA

Mr Andrew is an accountant and finance director of significant experience. He has worked in senior management, accounting and finance roles with a number of public companies and is a member of CPA Australia. Mr Andrew resigned from the board from 30 November 2010.

Ilmars Draudins B Eng, MBA

Mr Draudins is an investment banker and director of Collins Street Group Pty Ltd, a firm that provides a range of corporate advisory services to small and mid cap companies. His career covers numerous industries including engineering, electronics, telecommunications, corporate advisory and investment banking. Mr Draudins resigned from the board from 30 November 2010.

Mark Menzies

Mr Menzies is a retired stockbroker and former senior and managing partner of Tonkin Scorer Menzies, Stockbrokers, and a former director of NSX Limited, and its subsidiary, Stock Exchange of Newcastle Limited. Mr Menzies resigned from the board from 30 November 2010.

Jon O’Callaghan

Mr O’Callaghan is a corporate financier whose experience includes initiating, structuring and managing a range of transactions including IPO’s, takeovers and re-organisation. Mr O’Callaghan resigned from the board from 30 November 2010.

Company Secretary Nathan Bartrop Mr Bartrop is a Chartered Secretary and associate member of Chartered Secretaries Australia. His previous role was as Assistant Company Secretary at Mirabela Nickel Limited, a nickel producer in Brazil. Prior to this, he worked at ASX for 2 years as a Listings Adviser in Perth which involved the provision of interpretation and advice to existing and prospective listed entities and their advisers, in relation to the application of the ASX Listing Rules. Mr Bartrop also has previous experience working in litigation.

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Directors’ Interests Relevant interests of the directors in the shares, options or other instruments of the company at the reporting date (30 June 2011) are:

Director

Ordinary Shares

Held Directly

Ordinary Shares

Held Indirectly

Options

No. of

Options Grant Date

Exercise Price

Expiry Date

Wayne Mitchell 302,242 - 3,000,000 30/11/2010 $ 0.20 30/09/2014 Wesley Harder 302,242 - 1,500,000 30/11/2010 $ 0.20 30/09/2014 Anthony King 302,242 - 1,000,000 30/11/2010 $ 0.20 30/09/2014 David Smith 467,841 - - - - -

Relevant interests of the directors in the shares, options or other instruments of the company at the date of this report are:

Director

Ordinary Shares

Held Directly

Ordinary Shares

Held Indirectly

Options

No. of

Options Grant Date

Exercise Price

Expiry Date

Wayne Mitchell 379,136 - 3,000,000 30/11/2010 $ 0.20 30/09/2014 Wesley Harder 604,484 - 1,651,121 30/11/2010 $ 0.20 30/09/2014 Anthony King 302,242 - 1,000,000 30/11/2010 $ 0.20 30/09/2014 David Smith 1,850,000 8,000 - - - -

Directors’ Meetings The company held two Directors’ meetings during the year. The attendances of the directors in office during the year at meetings of the Board were:

Board of Directors Audit Committee

Director Attended Held Attended Held Wayne Mitchell 1 1 - - Wesley Harder 1 1 - - Tony King 1 1 - - David Hickie 1 1 - - Bruce Andrew 1 1 - - Richard Green - 1 - - Ilmars Draudins 1 1 - - Mark Menzies - 1 - - Jon O’Callaghan - 1 - -

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Review of Operations and Principal Activities The company did not trade during the year. The company’s affairs were managed by the administrator under the terms of an administration which commenced on 18 January 2010, and ceased on 24 December 2010. The only activity conducted by the company during the year was to engage in arrangements associated with implementation of the Framework Agreement for reconstruction of the Company (discussed below). Corporate Structure Orpheus Energy Limited (formerly Australian Motor Finance Group Limited) is a company limited by shares that is incorporated and domiciled in Australia. Trading Results The consolidated loss of the entity for the financial year was $242,854 (2010, loss $89,402) Dividends No dividends have been paid or declared since the beginning of the financial year by the Company. Environmental Regulations The Group is not subject to significant environmental regulations. Indemnification and Insurance During, but not throughout, the financial year ended 30 June 2011, the company indemnified its directors, the company secretary and executive officers in respect of any acts or omissions giving rise to a liability to another person (other than the company or a related party) unless the liability arose out of conduct involving a lack of good faith. In addition, the company indemnified the directors, the company secretary and executive officers against any liability incurred by them in their capacity as directors, company secretary or executive officers in successfully defending civil or criminal proceedings in relation to the company. The Company has insured its directors, the company secretary and executive officers for the financial year ended 30 June 2011. Under the company’s Directors’ and Officers’ Liabilities Insurance Policy, the Company shall not release to any third party or otherwise publish details of the nature of the liabilities insured by the policy or the amount of the premium. Accordingly, the company relies on section 300(9) of the Corporations Act 2001 to exempt it from the requirement to disclose the nature of the liability insured against and the premium amount of the relevant policy.

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Significant Events Affecting State of Affairs Framework Agreement for Reconstruction of Company In October 2009 the company reported that it has entered into a Framework Agreement for the reconstruction and relisting of the company on the ASX. The reorganised company was re named Orpheus Energy Limited on 30 November 2010. The company reported that proposal was subject to compliance with regulatory requirements and shareholder and other approvals, and involved:

(a) Acquiring a portfolio of coal and minerals projects from several vendors which are at various stages of negotiations and are expected to include the Hodgson Vale coal project (EPC1145, QLD) and Ashford Limestone Project ( EL 6511, NSW);

(b) Acquiring Orpheus Energy Group Pty Ltd, which plans to acquire rights to participate in further coal, uranium and industrial minerals projects;

(c) Consolidation of present issued share capital of 53,801,664 ordinary shares on a 1 for 5 basis to 10,760,333 ordinary shares (in anticipation of future share issues);

(d) Consolidation of present issued options of 27,558,748 options on a 1 for 5 basis to 5,511,750 options;

(e) A deed of company arrangement where Orpheus Energy Group Pty Ltd will advance a convertible loan of $132,557 to the company to extinguish its existing liabilities which will be satisfied by the payment of $132,557 in cash and the balance in shares in the company;

The company reported that should the proposal clear shareholder, contractual and regulatory hurdles, a new board of directors experienced in coal and minerals projects would be appointed. A share issue and capital raising would be completed in conjunction with any ASX relisting. In respect of the company’s remaining assets, these would be divested from the company. As part of the Framework Agreement outlined above, the company was placed into voluntary administration on 18 January 2010, and, on 16 March 2010 it entered into a Deed of Company Arrangement. The administration ceased on 24 December 2010, after payment by the Deed Administrators of the dividend to creditors. All claims upon the Company occurring prior to the Company going into external administration have been extinguished under the terms of the Deed. Implementation of Arrangements for Reconstruction of the Company At 30 June 2011, the following matters foreshadowed in the Framework Agreement had been implemented:

Completion of administration including the Deed of Company Arrangement Appointment of new directors Change of name to Orpheus Energy Limited Consolidation of issued capital and options Shareholder approval for the acquisition of Orpheus Energy Pty Ltd and various coal projects Divestment of former subsidiary Australian Motor Finance Limited (Receivers and Managers

Appointed) Issue of Prospectus on 24 May 2011 Issue of supplementary prospectus on 27 June 2011

At 30 June 2011, the company was well advanced with the remaining arrangements required to achieve re-listing on ASX.

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Significant Events Affecting State of Affairs (continued) Events After Balance Date including re-listing on ASX The company completed the arrangements and requirements for re-listing after balance date, and trading in the company’s shares was reinstated on ASX on 17 August 2011. The following transactions anticipated by the Framework Agreement which were conditional on re-listing were concluded after balance date:

Acquisition of Orpheus Energy Group Pty Ltd and the Ashford and Hodgson Vale Projects Conversion of equity loan to shares Conversion of convertible notes to shares Placement of 30,000,000 shares with attaching options at an exercise price at $ 0.20

On 22 September the Company announced that it had secured a 51% equity interest in two additional tenements, Block 3 and Block 4, in East Kalimantan Province, Indonesia, thereby extending the coal projects under its strategic alliance with Pt Mega Coal International. Shares and Options The following issues of shares and options were made in relation to the post balance date events noted above:

Issue of 25,000,000 shares and 12,500,000 options in consideration for the acquisition of Orpheus Energy Pty Ltd and related coal projects and assets;

Issue of 10,000,000 shares and 5,000,000 options in consideration for conversion of equity loan facility

Issue of 34,500,000 shares and 17,250,000 options in consideration of conversion of convertible notes

Issue of 30,000,000 shares to public investors and underwriters of issue Issue of 588,731 options to public investors Issue of 1,425,000 options to employees and consultants

Since the end of the financial year, and up to the date of this report, no new shares have been issued as a consequence of the exercise of options which were on issue at year end. Since the end of the financial year, no options have expired. The total number of options outstanding at the date of this report is 54,474,147. Details of movements in share options during the year ended 30 June 2011 are set out in Note 11 in the financial statements. Likely Developments and Future Results The Directors have excluded from this report any information on likely developments in the operations of the consolidated entity and the expected results of those operations in future financial years, since, in the opinion of the directors, it may prejudice the interests of the group if this information were included.

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Remuneration Report (Audited) This remuneration report outlines the director and executive remuneration arrangements of the Company in accordance with the requirements of the Corporations Act 2001 and its regulations. For the purposes of this report, Key Management Personnel (KMP) of the Company are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company directly or indirectly, including any director (whether executive or otherwise) of the company. For the purposes of this report, “executive” encompasses the Managing Director, Chief Operating Officer, Director Corporate Affairs and the senior executives, who collectively comprise the Executive Management team. Details of Key Management Personnel during the year ended 30 June 2011 Wayne Mitchell Chairman, Chief Executive Officer (appointed 30 November 2010) Wesley Harder Executive Director, Exploration Manager (appointed 30 November 2010) Anthony King Non-executive director (appointed 30 November 2010) David Hickie Non-executive director (resigned 30 November 2010) Bruce Andrew Non-executive director (resigned 30 November 2010) Ilmars Draudins Non-executive director (resigned 30 November 2010) Mark Menzies Non-executive director (resigned 30 November 2010) Jon O’Callaghan Non-executive director (resigned 30 November 2010)

Remuneration Philosophy The quality and performance of directors, executives and staff is critical to achieving business success. The Company must foster a remuneration policy that attracts, motivates and retains personnel of the highest calibre. In formulating a framework for remuneration policies and practices, the board takes account of the following factors:

Capacity to pay. Employment market conditions. Company performance. Identification of appropriate performance benchmarks. Individual performance levels.

Objective of Remuneration Policy The overall objective of the remuneration policy is to ensure maximum stakeholder benefit from the retention of a high quality board, management and staff at a cost which is commercially realistic and acceptable to shareholders. This objective seeks to:

Reward employees for individual performance against appropriate benchmarks. Align the interests of management and staff with those of shareholders. Provide a link between rewards and the achievement of strategic targets, performance outcomes

and share price. Ensure remuneration is competitive by market standards.

Remuneration Structure In accordance with best practice corporate governance, the structure of non-executive director and executive compensation is separate and distinct.

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Remuneration Report (Audited) (continued) Remuneration Committee The board has previously formed the view that the small scale of the company and the small number of employees did not warrant the establishment of a Remuneration Committee. The matter will be kept under review. Non-executive Director Remuneration The Constitution of the company and the ASX Listing Rules establish an aggregate or maximum level of remuneration available to non-executive directors, to be divided amongst the directors as agreed. The Board has determined that non-executive directors shall receive only fixed remuneration by way of payment of fees. There is no variable, short term incentive remuneration for non-executive directors, nor is there any entitlement to retiring allowances or payments other than the statutory superannuation required by law. Each non-executive director is entitled to receive an annual fee for all services provided to the company, including being a director of the company. The remuneration of non-executive directors for the years ended 30 June 2011 and 30 June 2010 is detailed in Table 1 and Table 2 on page 13 of this report. Executive Remuneration The Board is responsible for establishing the structure and amount of remuneration for executive management. The Board may obtain independent, external data on market trends in comparable executive roles. Remuneration currently consists only of fixed components. There are no short-term or long term incentive arrangements and as a consequence, no element of remuneration is performance based. Objective of fixed remuneration: The level of fixed remuneration is set so as to provide a base level of remuneration, which is both appropriate to the position and competitive in the market. Structure of fixed remuneration: Fixed remuneration is reviewed annually by the Board, and the process consists of a review of company and individual performance, and comparative remuneration in the market. All employees are provided with the opportunity to receive their fixed remuneration in both cash or benefits, subject to there being no change in overall cost to the company. Compulsory superannuation contributions are included in the determination of fixed remuneration.

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Remuneration Report (Audited) (continued) Compensation of Key Management Personnel

Table 1: Compensation of Key Management Personnel for the year ended 30 June 2011

Short Term

Post Employment Benefit

Long Term

30-Jun-11 Salary & Fees

Share based – shares**

Superannuation Long Service

Leave Share based-

Options** TOTAL

$ $ $ $ $ $

Directors

W. Mitchell - ** - - - -

W. Harder - ** - - - -

A. King - ** - - - -

D. Hickie 12,500 ** - - - 12,500

B. Andrew - ** - - - -

I Draudins - ** - - - -

F Menzies - ** - - - -

J O’Callaghan - - - - -

12,500 - - - 12,500

** Shares and Options were approved for issue to Directors and Key Management Personnel at the company’s General meeting on 30 November 2010. Details are shown below. There following issues of shares and options as part of remuneration to current and past directors were made during the year ended 30 June 2011 following approval by members in general meeting (year ended 30 June 2010, nil):

Shares Options

Number Issued Number Issued

Exercise Price

Expiry Date Directors W. Mitchell - 3,000,000 $0.20 30/09/2014

W. Harder - 1,500,000 $0.20 30/09/2014

A. King - 1,000,000 $0.20 30/09/2014

R Green 50,000 25,000 $0.20 31/12/2011

B. Andrew 62,500 31,250 $0.20 31/12/2011

I Draudins 75,000 37,500 $0.20 31/12/2011

F Menzies 75,000 37,500 $0.20 31/12/2011

J O’Callaghan 75,000 37,500 $0.20 31/12/2011

287,500

5,643,750

A nil value has been attributed to the share based payments since the company was in administration and the company’s shares had not publicly traded for a considerable time prior to grant date. As the shares were assessed to have nil value at grant date, it follows that the options over those shares similarly had no value at that point in time.

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Remuneration Report (Audited) (continued) Compensation of Key Management Personnel


Short Term Post employment Long Term

30 June 2010 Salary & Fees

$ Superannuation

$

Long Service Leave

$

Share based-Options

$ TOTAL

$ Directors

D. Hickie 19,500 - - - 19,500

B. Andrew - - - - -

R. Green - - - - -

I Draudins - - - - -

F Menzies - - - - -

J O’Callaghan - - - -

19,500 - -

-

19,500

Shares Issued on Exercise of Compensation Options No shares have been issued as a result of the exercise of options granted as compensation to key management personnel during the years ended 30 June 2011 and 30 June 2010. Proceedings on Behalf of Company

No person has applied for leave of Court to bring proceedings on behalf of the company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings.

The company was not a party to any such proceedings during the year.

Auditor Independence and Non-Audit Services The directors received a declaration from the auditor of Orpheus Energy Limited (formerly Australian Motor Finance Group Limited) which is appended to this report. Non-Audit Services There were no non-audit services provided by Hall Chadwick, the current auditors of the company. The board of directors of Australian Motor Finance Limited has declared that it is satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. F

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Options

At the date of this report, being 30 September 2011, the unissued ordinary shares of the company under option are as follows:

Grant Date Date of Expiry Exercise Price Number under Option

08/09/2007 08/09/2012 $2.63 1,619,049

15/12/2006 15/12/2011 $2.63 47,620

30/11/2010 31/12/2011 $0.20 2,293,750

30/11/2010 30/09/2014 $0.20 12,750,000

08/08/2011 31/12/2011 $0.20 35,338,731

08/08/2011 04/08/2014 $0.25 1,000,000

17/08/2011 30/09/2014 $0.20 1,425,000

54,474,150

Option holders do not have any rights to participate in any issues of shares or other interests in thecompany or any other entity.

For details of options issued to directors and executives as remuneration, refer to the remuneration report.

This report has been made in accordance with a resolution of directors. Director 30 September 2011

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Corporate Governance Statement

The Australian Securities Exchange (ASX) Corporate Governance Council has published Corporate Governance Principles and Recommendations (2nd Edition) (Recommendations). Entities listed on the ASX are required to disclose the extent to which they have followed the ASX Recommendations and to identify any recommendations that have not been followed, and the reasons for not following them. The section below includes details on the Company’s corporate governance arrangements and the Company’s compliance with the recommendations. Orpheus Energy has chosen not to early adopt the 2010 changes to the Recommendations, and will report in its annual report, against the revised Recommendations for the financial year ended 30 June 2012. PRINCIPLE 1 – LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT Role of the Board The Board of Directors of Orpheus Energy is collectively experienced in coal and mineral exploration, mine development, finance and the management of listed public companies, and the requirements of, and compliance with, the law and ASX and ASIC rules and policies. As the Company will use contractors for its exploration and mine development work, the Board generally will be responsible for over-seeing the work of those contractors and their performance against contract. Four of the Directors, including the Company’s Chief Executive Officer, are qualified and experienced in mineral exploration and mine development The Board approves and monitors corporate strategy and performance objectives. Under the oversight of the Board’s Audit and Risk Committee, the Board monitors systems of risk management, compliance and financial reporting. The Board is responsible for approving and monitoring the progress of major capital expenditure, capital management and acquisitions and divestitures of Company assets. Responsibility for the day-to-day management of the Company is delegated by the Board to the Chief Executive Officer and Managing Director (Managing Director), who is accountable to the Board. The Managing Director manages the Company in accordance with the strategy, plans and policies approved by the Board. The Board has determined that the managing director is appropriately qualified and experienced to discharge the required responsibilities. A performance review was conducted for senior executives in accordance with the process disclosed in the remuneration report. PRINCIPLE 2 – STRUCTURE THE BOARD TO ADD VALUE Composition of the Board As at 30 June the Board comprised 2 executive directors and 1 non-executive director. Mr David Smith was appointed to the board on 18 August 2011 as an additional executive director. The Board supports the appointment of directors who bring a wide range of business and professional skills and experience to the Company. Directors are appointed in accordance with the constitution of Orpheus Energy and are appointed for a period of three years or until the third annual general meeting following his or her appointment (whichever is longer). The board currently has no formal procedure for evaluation of its board, committee and directors. The board considers that it is functioning effectively given its composition and a formal procedure is not required at this present time. The Company has elected to depart from the adoption of the ASX Corporate Governance Guidelines in that it will not be forming a nomination committee or a remuneration committee nor will it appoint independent directors for the reason that these requirements are more appropriate for larger public companies and would unduly add to the cost structure of the Company. The Company will review its position on these requirements bi-annually. The board currently evaluates periodically the need for additional directors, the re-election of existing directors and where required appoints additional directors. The Company currently only considers one of its directors independent out of 4 directors, which does not comply with Recommendation 2.1, in that the majority of the board should be independent directors. The Board is satisfied however that the Board has an effective composition, size and commitment to adequately discharge its responsibilities and duties.

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PRINCIPLE 3: ACTIVELY PROMOTE ETHICAL AND RESPONSIBLE DECISION MAKING Code of Conduct The Company does not yet have a formal Code of Conduct setting out its core values. In general though, the Company requires that each director and officer of the Company must comply with all laws and regulations. This includes understanding the laws and regulations relevant to their work and complying with the legal requirements of the jurisdiction in which the Company operates. Contractors and others employed by the Company should not engage in activities or hold or trade assets that involve, or could appear to involve, a conflict between their personal interests and the interests of the Company. The practices of the Board are aimed at promoting ethical and responsible decision making. The Board strives for good corporate governance and industry best practice. It specifically requires directors and employees to: avoid situations which may give rise to a conflict of interest; avoid situations where they may gain any benefit which competes with Company’s business; read and confirm that they understand the Company’s policies; comply with laws and regulations; properly use Company’s assets for legitimate business purposes; and maintain confidentiality in both Company’s business and the information of its clients and

shareholders. Conflicts of Interest The Board is committed to good corporate governance and aims for continuous improvement in these practices. It embraces high ethical standards and requires both personal and corporate responsibility. Directors, officers and employees are required to safeguard the integrity of the Company and to act in the best interests of its stakeholders. Each director is required to disclose any interest which might create a potential conflict of interest with his or her duties as a director or which might affect their independence. There must be no conflict, or perception of a conflict, between the interests of any Company director, officer or employee and the responsibility of that person to the stakeholders. All directors, officers and employees may never improperly use their position for personal or private gain to themselves, a family member, or other associated person. Where a potential conflict exists, this should be disclosed to the Chairman prior to any dealings taking place. Trading Policy The Company’s trading policy, available on the Company’s website, ensures that unpublished price sensitive information about the Company is not used in an unlawful manner. The main provisions of this policy are: compliance with the specific requirements of the Corporations Act 2001; prohibition of short term trading by directors, officers, employees and contractors in the Company’s

securities; and prior notification by directors, officers, employees and contractors of their intention to deal in the

Company’s securities. Trading is not permitted (unless exceptional circumstances) in the following periods:

the period 1 January until the conclusion of the first day after the day of release of the December quarterly report;

the period 1 April until the conclusion of the first day after the day of release of the March quarterly report;

the period 1 July until the conclusion of the first day after the day of release of the June quarterly report;

the period 1 October until the conclusion of the first day after the day of release of the September quarterly report; and

such other periods advised from time to time by the Board and/or Managing Director (such as prior to the announcement to ASX of a significant matter or event).

The Company’s Share trading policy prohibits the entering into transactions in associated products which limit the economic risk of participating in unvested entitlements under any equity based remuneration scheme.

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PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING Audit & Risk Committee (established 12 August 2011) Purpose The Audit & Risk Committee plays a key role in assisting the Board with its responsibilities relating to accounting, internal control systems, reporting practices and risk management, and ensuring the independence of the company auditor. The terms of reference for the committee incorporates policies and procedures to ensure an effective focus from an independent perspective. The Audit & Risk Committee oversees and appraises the quality of the audits conducted by the auditors and emphasises areas where the Committee believes special attention is required. The external auditors are Hall Chadwick. Hall Chadwick’s appointment will be reviewed periodically in line with industry best practice. The Board believes in the ongoing assessment of our audit arrangements and will comply with any regulatory requirements to rotate the Company’s external audit partner. The Audit & Risk Committee also reviews the effectiveness of administrative, operating and accounting controls. Composition The composition of the Audit & Risk Committee is determined in accordance with the principle that only non-executive directors may be members of the Committee. There must be at least 2 directors on the Committee. Other suitable persons may also be appointed to the committee by the directors. The committee currently does not comply with Recommendation 4.2 in that it only comprises two members and the Chairman of the Committee is also Chairman of the Board. The board currently considers this practice to be adequate, however periodically reviews its composition and the need to appoint additional directors and others to the Committee. Terms of Reference The Committee’s Terms of Reference are published on the Company’s web site www.orpheusenergy.com.au PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE

Continuous Disclosure Policy ASX defines continuous disclosure in its Listing Rules as “the timely advising of information to keep the market informed of events and developments as they occur”. The Listing Rules and the Corporations Act require that a listed company disclose to the market matters which a reasonable person would expect to have a material effect on the price or value of the company’s securities. A reasonable person is taken to expect information to have a material effect on the price or value of securities if it would, or would be likely to, influence persons who commonly invest in securities in deciding whether or not to subscribe for, buy or sell the securities. The Company’s Continuous Disclosure Policy, available on the Company’s website, is designed to meet market best practice, ensuring that all interested parties have an equal opportunity to obtain information which is issued by the Company. The procedures which have been developed to comply with these rules include immediate reporting of any matter which could potentially have a material effect, via established reporting lines to the Company Secretary. The Company Secretary is responsible for monitoring information which could be price sensitive, liaising with the CEO and the Chairman to make an initial assessment, and escalating to the Board for disclosure of such information where practicable. The CEO monitors daily activity to ascertain what matters should be considered for disclosure and as soon as a matter is appropriate for disclosure the CEO must immediately notify the Company Secretary. It is noted that the Company must not delay giving this information to the ASX. Therefore, if the Board is not immediately available, the Company Secretary will lodge such information after consultation with the CEO or the Chairman. Price-sensitive information will be disclosed, in the first instance, to the ASX and disclosures to the market will then be placed on the Company’s website. Material information must not be selectively

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disclosed (i.e. to analysts, the media or shareholders) prior to being announced to the ASX, and all media releases must be referred to the Company Secretary for clearance prior to any release. PRINCIPLE 6: RESPECT THE RIGHTS OF SHAREHOLDERS Shareholder Communications Policy The Board has adopted a communication strategy to promote effective communication with shareholders and encourage effective participation at general meetings. In accordance with our regulatory obligations, certain periodic reporting will also be made to shareholders, including the Annual Report. Our aim is for informed shareholder participation. The Company maintains a web site and endeavours to publish on the web site all relevant announcements made to the market. In accordance with ASX Principle 6.2, the external auditors are requested to attend the annual general meeting and are available to answer shareholder questions about the conduct of the audit and preparation of the auditor’s report. PRINCIPLE 7: RECOGNISE AND MANAGE RISK Risk Management The Board takes a proactive approach to the Company’s risk management and internal compliance and control systems. The Audit & Risk Committee oversee and manage material business risks, with the entire Board a crucial part of this entire process. The Board is responsible for ensuring that risks, and also opportunities are identified on a timely basis and that the Company’s objectives and activities are aligned with the risks and opportunities identified by the Board. The Managing Director and the Chief Financial Officer are responsible for establishing, maintaining and reviewing the Company’s risk management and internal control system. The Managing Director and Chief Financial Officer must provide quarterly reports to the Board declaring that they have evaluated the effectiveness of the internal controls and procedures, and that they have reasonable assurance that all material information is known for filing purposes, the internal control of financial reporting is reliable for purposes of external reporting in accordance with the relevant accounting standards, and that no changes in the controls have occurred that may materially affect their effectiveness. The Managing Director and the Chief Financial Officer have declared in writing to the Board, as required under section 295A of the Corporations Act 2001 that the financial reporting, risk management and associated compliance and controls have been assessed and found to be operating efficiently and effectively in all material respects. All risk assessments cover the whole financial period and the period up to the signing of the annual financial report for all material operations in the Company. PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY Increases in remuneration of directors is determined by shareholders and the Board determines individual directors’ remuneration. The Company has not formed a Nominations Committee because of the Company’s size which is small enough for the whole Board to efficiently address the issue of board competencies. The Company has no Non-Executive Director Remuneration Remuneration of non-executive Directors is determined by the Board with reference to comparable industry levels and, specifically for Directors’ fees, within the maximum amount approved by shareholders. Recommendation 8.2 contains guidelines that non-executive directors should not receive options or bonus payments. The Company awards options or bonuses to non-executive Directors if it considers this to be a reasonable and appropriate method of assisting in attracting and retaining suitably skilled Board members. Accordingly the company is not in compliance with ASX Recommendation 8.2. There is no scheme to provide retirement benefits, other than statutory superannuation, to non-executive Directors.

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Statement of Comprehensive Income FOR THE YEAR ENDED 30 JUNE 2011

Note Consolidated

2011 2010

$ $

Revenue 3 846 271

Expense

Finance costs 9,574 1,417

Employee benefits expenses 12,500 19,500

Administration expenses 221,626 68,756

243,700 89,673

Loss before income tax 242,854 89,402

Income tax expense 4 - -

Total comprehensive loss for year 242,854 89,402

Overall Operations

Basic earnings (loss) per share (cents per share) 5 (0.2) (0.2)

Diluted earnings per share (cents per share) 5 (0.2) (0.2)

The accompanying notes form part of these financial statements.

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Statement of Financial Position AS AT 30 JUNE 2011

Note Consolidated

2011 $

2010 $

ASSETS

Current Assets

Cash and cash equivalents 6 1,606,800 50,413

Trade and other receivables 7 119,511 17,458

Total Current Assets 1,726,311 67,871

TOTAL ASSETS 1,726,311 67,871

LIABILITIES

Current Liabilities

Trade and other payables 9 1,641,560 110,414

Borrowings 10 434,205 64,057

Total Current Liabilities 2,075,765 174,471

TOTAL LIABILITIES 2,075,765 174,471

NET ASSETS / (LIABILITIES) (349,454) (106,600)

EQUITY

Issued capital 11 8,383,694 8,383,694

Reserves 11 979,952 979,952

Accumulated losses 11 (9,713,100) (9,470,246)

TOTAL EQUITY / (DEFICIENCY) (349,454) (106,600)


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Statement of Changes in Equity FOR THE YEAR ENDED 30 JUNE 2011

Issued

Capital

Accumulated

Losses

Reserves Total Equity

$ $ $ $

Balance at 30 June 2009 8,362,642 (9,380,844) 979,952 (38,250)

Shares issued in placement 21,052 - - 21,052

Total comprehensive loss for year - (89,402) - (89,402)

Balance at 30 June 2010 8,383,694 (9,470,246) 979,952 (106,600)

Total comprehensive loss for year - (242,854) - (242,854)

Balance at 30 June 2011 8,383,694 (9,713,100) 979,952 (349,454)


Statement of Cash Flows FOR THE YEAR ENDED 30 JUNE 2011

Note

2011 $

2010 $

Cash flows from operating activities

Payments to suppliers and employees (414,868) (71,958)

Interest received 846 271

Finance costs paid (9,574) -

GST refunds received 3,075 14,184

Net cash flows (used in ) operating activities 6 (420,521) (57,503)

Net cash flows from/(used in) investing activities - -

Cash flows from financing activities

Share application monies received 1,606,760

Shares issued in placement - 21,052

Proceeds from borrowings 370,148 64,057

Net cash flows from/(used in) financing activities 1,976,908 85,109

Net increase (decrease) in cash and cash equivalents 1,556,387 27,606

Cash and cash equivalents at beginning of period 50,413 22,807

Cash and cash equivalents at end of period

6 1,606,800

50,413


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Notes to the Financial Statements FOR THE YEAR ENDED 30 JUNE 2011

The financial report includes the financial statements and notes of Orpheus Energy Limited, a listed public company incorporated and domiciled in Australia.

1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

(a) Significant Changes in State of Affairs (b) Significant Events After Balance Date (c) Basis of preparation (d) Basis of consolidation (e) Going Concern (f) New Accounting standards and Interpretations (g) Statement of compliance (h) Significant accounting judgments, estimates and assumptions (i) Revenue recognition (j) Cash and cash equivalents (k) Trade and other receivables (l) Income tax (m) Other taxes (n) Impairment of assets (o) Trade and other payables (p) Provisions and employee leave benefits (q) Issued capital (r) Share based payment transactions (s) Earnings (Loss) per share (t) Exploration and Development Expenditure (u) Financial Instruments

a) Significant Changes in State of Affairs

Framework Agreement for Reconstruction of Company In October 2009 the company reported that it has entered into a Framework Agreement for the reconstruction and relisting of the company on the ASX. The reorganised company would be re named Orpheus Energy Limited. The company reported that proposal is subject to compliance with regulatory requirements and shareholder and other approvals, and will involve:

a) Acquiring a portfolio of coal and minerals projects from several vendors which are at various stages of negotiations and are expected to include the Hodgson Vale coal project (EPC1145, QLD) and Ashford Limestone Project ( EL 6511, NSW) ;

b) Acquiring Orpheus Energy Group Pty Ltd, which plans to acquire rights to participate in further coal, uranium and industrial minerals projects;

c) Consolidation of present issued share capital of 53,801,664 ordinary shares on a 1 for 5 basis to 10,760,333 ordinary shares (in anticipation of future share issues);

d) Consolidation of present issued options of 27,558,748 options on a 1 for 5 basis to 5,511,750 options;

e) A deed of company arrangement where Orpheus Energy Group Pty Ltd will advance a convertible loan of $132,557 to the company to extinguish its existing liabilities which will be satisfied by the payment of $132,557 in cash and the balance in shares in the company;

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1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) a) Significant Changes in State of Affairs (continued)

The company reported that should the proposal clear shareholder, contractual and regulatory hurdles, a new board of directors experienced in coal and minerals projects would be appointed. A share issue and capital raising would be completed in conjunction with any ASX relisting. In respect of the company’s remaining assets, these would be divested from the company. As part of the Framework Agreement outlined above, the company was placed into voluntary administration on 18 January 2010, and, on 16 March 2010 it entered into a Deed of Company Arrangement. The administration ceased on 24 December 2010, after payment by the Deed Administrators of the dividend to creditors. All claims upon the Company occurring prior to the Company going into external administration have been extinguished under the terms of the Deed. Implementation of Arrangements for Reconstruction of the Company At 30 June 2011, the following matters foreshadowed in the Framework Agreement had been implemented:

Completion of administration including the Deed of Company Arrangement Appointment of new directors Change of name to Orpheus Energy Limited Consolidation of issued capital and options Shareholder approval for the acquisition of Orpheus Energy Pty Ltd and various coal projects Divestment of former subsidiary Australian Motor Finance Limited (Receivers and Managers

Appointed) Issue of Prospectus on 24 May 2011

At 30 June 2011, the company was well advanced with the remaining arrangements required to achieve re-listing on ASX. b) Events After Balance Date including re-listing on ASX The company completed the arrangements and requirements for re-listing after balance date, and trading in the company’s shares was reinstated on ASX on 17 August 2011. The following transactions anticipated by the Framework Agreement which were conditional on re-listing were concluded after balance date:

Acquisition of Orpheus Energy Pty Ltd Conversion of equity loan to shares Conversion of convertible notes to shares Placement of 30,000,000 shares with attaching options at an exercise price of $0.20

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1 STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

c) Basis of preparation The financial report of Orpheus Energy Limited (formerly Australian Motor Finance Group Limited) (the Company) for the year ended 30 June 2011 was authorised for issue in accordance with a resolution of the directors on 30 September 2011. The financial report is a general purpose financial report, which has been prepared, subject to Note 1 (a), in accordance with Australian Accounting Standards (‘AASBs’) (including Australian Accounting Interpretations and other authoritative pronouncements) as issued by the Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001. The financial report has been prepared on an accruals basis and is based on historic costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.

d) Basis of consolidation The consolidated financial statements comprise the financial statements of Orpheus Energy Limited (formerly Australian Motor Finance Group Limited) and its subsidiaries as at 30 June each year (the Group). Subsidiaries are all those entities over which the Group has the power to govern the financial and operating policies so as to obtain benefits from their activities. Details of subsidiaries are set out in Note 14. Subsidiaries are fully consolidated from the date on which control is obtained by the Group and cease to be consolidated from the date on which control is transferred out of the Group. Subsidiary Bushveld Exploration (SA) Pty Ltd has not been consolidated as its net assets are immaterial and it did not trade during the year. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Investments in subsidiaries held by Orpheus Energy Limited (formerly Australian Motor Finance Group Limited) are accounted for at cost in the separate financial statements of the parent entity.

e) Going Concern

During the period ended 30 June 2011, the company incurred a loss of $242,854 and had a deficiency of net assets as at 30 June 2011 of $349,454. However the directors have prepared the financial report on a going concern basis as subsequent to the year end, the company completed a capital raising exercise which raised $7,500,000 and was re-admitted to the ASX for trading in the company securities. The directors now believe that the company has sufficient funds to meet the company’s short term commitments for at least the next 12 months for the date of this report and accordingly the directors are of the opinion that the going concern basis is appropriate for preparation of the financial statements for the period ended 30 June 2011.

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Notes to the Financial Statements (continued) FOR THE YEAR ENDED 30 JUNE 2011


f) New accounting standards and interpretations

(i) Accounting standards for application in future periods Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Group for the annual reporting period ending 30 June 2011. These are outlined in the table below.

Reference Title Summary Application

date of standard*

Impact on Group

financial report

Application date for Group*

AASB 9 Financial Instruments

AASB 9 includes requirements for the classification and measurement of financial assets resulting from the first part of Phase 1 of the IASB’s project to replace IAS 39 Financial Instruments: Recognition and Measurement (AASB 139 Financial Instruments: Recognition and Measurement).

The main changes from AASB 139 are described below.

(a) Financial assets are classified based on (1) the objective of the entity’s business model for managing the financial assets; (2) the characteristics of the contractual cash flows. This replaces the numerous categories of financial assets in AASB 139, each of which had its own classification criteria.

(b) AASB 9 allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument.

(c) Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities, or recognising the gains and losses on them, on different bases.

1 January 2013

The Group has not assessed the impact of the new standard on its financial report

1 July 2013

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2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

g) Statement of compliance (continued) (i) Accounting for application in future periods (continued)


date of standard*

Impact on Group

financial report


AASB 2009-11

Amendments to Australian Accounting Standards arising from AASB 9 [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 121, 127, 128, 131, 132, 136, 139, 1023 & 1038 and Interpretations 10 & 12]

► These amendments arise from the issuance of AASB 9 Financial Instruments that sets out requirements for the classification and measurement of financial assets. The requirements in AASB 9 form part of the first phase of the International Accounting Standards Board’s project to replace IAS 39 Financial Instruments: Recognition and Measurement.

► This Standard shall be applied when AASB 9 is applied.

1 January 2013


1 July 2013

AASB 124 (Revised)

Related Party Disclosures (December 2009)

The revised AASB 124 simplifies the definition of a related party, clarifying its intended meaning and eliminating inconsistencies from the definition, including:

(a) The definition now identifies a subsidiary and an associate with the same investor as related parties of each other

(b) Entities significantly influenced by one person and entities significantly influenced by a close member of the family of that person are no longer related parties of each other

(c) The definition now identifies that, whenever a person or entity has both joint control over a second entity and joint control or significant influence over a third party, the second and third entities are related to each other

.

1 January 2011

The Group has considered the impact of this amendment and have determined that there will be no impact on the Group’s financial report

1 July 2011

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g) Statement of compliance (continued) (i) Accounting standards for application in future periods (continued)


date of standard*

Impact on Group

financial report


AASB 1054

Australian Additional Disclosures

This standard is as a consequence of phase 1 of the joint Trans-Tasman Convergence project of the AASB and FRSB.

This standard relocates all Australian specific disclosures from other standards to one place and revises disclosures in the following areas:

(a) Compliance with Australian Accounting Standards

(b) The statutory basis or reporting framework for financial statements

(c) Whether the financial statements are general purpose or special purpose

(d) Audit fees

(e) Imputation credits

1 July 2011 The Group has considered the impact of this amendment and have determined that there will be no impact on the Group’s financial report

1 July 2011

AASB 2010-4

Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 1, AASB 7, AASB 101, AASB 134 and Interpretation 13]

Emphasises the interaction between quantitative and qualitative AASB 7 disclosures and the nature and extent of risks associated with financial instruments.

Clarifies that an entity will present an analysis of other comprehensive income for each component of equity, either in the statement of changes in equity or in the notes to the financial statements.

Provides guidance to illustrate how to apply disclosure principles in AASB 134 for significant events and transactions.

1 January 2011

The Group has considered the impact of this amendment and have determined that there will be no impact on the Group’s financial report

1 July 2011

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date of standard*

Impact on Group

financial report


AASB 2010-7

Amendments to Australian Accounting Standards arising from AASB 9 (December 2010)

[AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023, & 1038 and interpretations 2, 5, 10, 12, 19 & 127]

The requirements for classifying and measuring financial liabilities were added to AASB 9. The existing requirements for the classification of financial liabilities and the ability to use the fair value option have been retained. However, where the fair value option is used for financial liabilities the change in fair value is accounted for as follows: ► The change attributable to changes

in credit risk are presented in other comprehensive income (OCI)

► The remaining change is presented in profit or loss

1 January 2013


1 July 2013

IFRS 10 Consolidated Financial Statements

IFRS 10 establishes a new control model that applies to all entities. It replaces parts of IAS 27 Consolidated and Separate Financial Statements dealing with the accounting for consolidated financial statements and SIC-12 Consolidation – Special Purpose Entities. The new control model broadens the situations when an entity is considered to be controlled by another entity and includes new guidance for applying the model to specific situations, including when acting as a manager may give control, the impact of potential voting rights and when holding less than a majority voting rights may give control. This is likely to lead to more entities being consolidated into the group.

1 January 2013


1 July 2013

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date of standard*

Impact on Group

financial report


IFRS 11 Joint Arrangements

IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly- controlled Entities – Non-monetary Contributions by Ventures. IFRS 11 uses the principle of control in IFRS 10 to define joint control, and therefore the determination of whether joint control exists may change. In addition IFRS 11 removes the option to account for jointly controlled entities (JCEs) using proportionate consolidation.

1 January 2013


1 July 2013

IFRS 12 Disclosure of Interests in Other Entities

IFRS 12 includes all disclosures relating to an entity’s interests in subsidiaries, joint arrangements, associates and structures entities. New disclosures have been introduced about the judgements made by management to determine whether control exists, and to require summarised information about joint arrangements, associates and structured entities and subsidiaries with non-controlling interests.

1 January 2013


1 July 2013

IFRS 13 Fair Value Measurement

IFRS 13 establishes a single source of guidance under IFRS for determining the fair value of assets and liabilities. IFRS 13 does not change when an entity is required to use fair value, but rather, provides guidance on how to determine fair value under IFRS when fair value is required or permitted by IFRS.

1 January 2013


1 July 2013

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h) Significant accounting judgements, estimates and assumptions In applying the Company’s accounting policies, management continually evaluates judgements, estimates and assumptions based on historical experience and other factors, including expectations of future events that may have an impact on the Company. All judgements, estimates and assumptions made are believed to be reasonable based on the most current set of circumstances available to management. Actual results may differ from the judgements, estimates and assumptions. The more significant judgements, estimates and assumptions made by management in the preparation of these financial statements are outlined below: Impairment of loans to, and investment in, subsidiaries Where a subsidiary entity incurs a loss, the parent entity assesses the recoverability of any loans due from, or investments in, any subsidiary. Where required, the parent entity will then record an impairment loss against the value of its loans to, or investment in, the subsidiary. Useful lives of assets The estimation of the useful lives of assets has been based on historical experience and management judgement. In addition, the condition of assets is assessed annually and considered in the context of remaining useful life, and adjustments to useful life are made where necessary. i) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

Interest revenue is received from bank balances held by the company. Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. j) Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short term deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Cash and short term deposits are stated at nominal values.

For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above. k) Trade and other receivables Trade receivables and other receivables, both of which generally have 30 day terms, are non interest bearing and are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An allowance for doubtful debts is made when there is objective evidence that the Company will not be able to collect the debts. Bad debts are written off when identified. l) Income tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date. Deferred income tax is provided on all temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the balance sheet date.

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l) Income tax (continued)

Deferred income tax liabilities are recognised for all taxable temporary differences except: when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or

liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or

when the taxable temporary difference is associated with investments in subsidiaries, associates or

interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised. Exceptions to this position arise:

when the deferred income tax asset relating to the deductible temporary difference arises from the

initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or

when the deductible temporary difference is associated with investments in subsidiaries, associates

or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date to determine whether it is probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. The carrying amount of deferred tax assets is reduced to the extent that it is not probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.

If deferred tax assets and deferred tax liabilities are recorded in the accounts, they are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

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m) Other taxes

Revenues, expenses and assets are recognised net of the amount of GST except: when the GST incurred on a purchase of goods and services is not recoverable from the taxation

authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

receivables and payables, which are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet. Cash flows are included in the Cash Flow Statement on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. n) Impairment of assets

At each reporting date, the company reviews the carrying values of its assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the income statement. Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs. o) Trade and other payables Trade payables and other payables are non interest bearing and are carried at amortised cost. They represent liabilities for goods and services provided to the company prior to the end of the financial year that are unpaid and arise when the company becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are generally paid on 30 day terms. p) Provisions and employee leave benefits 1) Provisions Provisions are recognised when the company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement. Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at balance date using a discounted cashflow methodology. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the time value of money and the risks specific to the liability.

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p) Provisions and employee leave benefits (continued)

2) Employee leave benefits

i) Wages, salaries, superannuation, and annual leave

Liabilities for wages and salaries, including non-monetary benefits, superannuation and annual leave expected to be settled within 12 months of the reporting dates are recognised in respect of employees' services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Expenses for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable. (ii) Long service leave The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

q) Issued capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds (net of tax). r) Share-based payment transactions (i) Equity settled transactions: The company has provided benefits to employees (including key management personnel) in prior years the form of share-based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions). The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled (the vesting period), ending on the date on which the relevant employees become fully entitled to the award (the vesting date). At each reporting date until vesting the cumulative charge to the income statement is the product of (i) the grant date fair value of the award; (ii) the current best estimate of the number of equity instruments that will ultimately vest, taking into account such factors as the likelihood of employee turnover during the vesting period, and the likelihood of non market performance conditions being met, and (iii) the expired portion of the vesting period. The charge to the income statement for the period is the cumulative amount as calculated above less the amounts already charged in previous periods. There is a corresponding entry to equity. Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than were originally anticipated to do so. Any award subject to a market condition is considered to vest irrespective of whether or not that market condition is fulfilled, provided all other conditions are satisfied.

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r) Share-based payment transactions (continued) If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. An additional expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification. If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings / (loss) per share.

s) Earnings (Loss) per share

Basic earnings (loss) per share is calculated as net profit (loss) attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) divided by the weighted average number of ordinary shares. Diluted earnings (loss) per share is calculated as net profit (loss) attributable to members of the parent, adjusted for:

costs of servicing equity (other than dividends) and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and

other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares;

divided by the weighted average number of ordinary shares and dilutive potential ordinary shares. t) Exploration and Development Expenditure

Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site.

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u) Financial Instruments

Recognition and initial measurement

Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the company commits itself to either the purchase or sale of the asset (ie trade date accounting is adopted).

Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified “at fair value through profit or loss”, in which case transaction costs are expensed to profit or loss immediately.

Classification and subsequent measurement

Finance instruments are subsequently measured at fair value, amortised cost using the effective interest rate method, or cost.

Amortised cost is the amount at which the financial asset or financial liability is measured at initial recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the difference between that initial amount and the maturity amount calculated using the effective interest method.

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models.

The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense item in profit or loss.

The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of Accounting Standards specifically applicable to financial instruments.

(i) Financial assets at fair value through profit or loss

Financial assets are classified at “fair value through profit or loss” when they are held for trading for the purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation where a Group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss.

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost.

Loans and receivables are included in current assets, where they are expected to mature within 12 months after the end of the reporting period.

(iii) Held-to-maturity investments Held-to-maturity investments are non-derivative financial assets that have fixed maturities and

fixed or determinable payments, and it is the Group’s intention to hold these investments to maturity. They are subsequently measured at amortised cost.

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Held-to-maturity investments are included in non-current assets where they are expected to

mature within 12 months after the end of the reporting period. All other investments are classified as current assets.

(iv) Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are either not suitable to be classified into other categories of financial assets due to their nature, or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments.

They are subsequently measured at fair value with changes in such fair value (ie gains or losses) recognised in other comprehensive income (except for impairment losses and foreign exchange gains and losses). When the financial asset is derecognised, the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is reclassified into profit or loss.

Available-for-sale financial assets are included in non-current assets where they are expected to be sold within 12 months after the end of the reporting period. All other financial assets are classified as current assets.

(v) Financial liabilities

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost.

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2 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Company’s principal financial instruments comprise receivables, payables, cash and short-term deposits and borrowings. The Company monitors its exposure to key financial risks, principally interest, credit and liquidity risk, with the objective of achieving the company’s financial targets whilst protecting future financial security. The main risks arising from the company's financial instruments are liquidity risk, interest rate risk and credit risk. The Company uses different methods to measure and manage different types of risks to which it is exposed. These include monitoring levels of exposure to interest rates and assessments of market forecasts for interest rates. Liquidity risk is monitored through the development of future rolling cash flow forecasts and regular internal reporting. The Board reviews and agrees policies for managing each of these risks as summarised below. Primary responsibility for identification and control of financial risks rests with the Board. It reviews and agrees policies for managing each of the risks, including the use of derivatives, hedging cover of interest rate exposure, credit allowances, and future cash flow forecast projections. Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in note 1 to the financial statements. Risk Exposures and Responses Interest rate risk The Company’s exposure to market interest rates relates primarily to the cash balances. At balance date, the Company had the following financial assets and liabilities exposed to Australian variable interest rate risk that are not designated in cash flow hedges:

Weighted average effective interest rate

Interest bearing balance

2011 2010 2011 2010 % % $ $

Financial assets

Cash in interest bearing accounts 0.9% 4.20% 1,606,800 40,271

1,606,800 40,271

Financial liabilities

Borrowings 9.5% 9.5% 434,205 64,057

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Sensitivity analysis A sensitivity analysis on movements in interest rates results in immaterial outcomes, due to the minimal interest rate exposure, and the short time period that interest exposures existed. Credit risk Credit risk arises from the financial assets of the Company, which comprise cash and cash equivalents, trade and other receivables. The company's exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. Exposure at balance date is addressed in each applicable note. The Company does not hold any credit derivatives to offset its credit exposure. As the Company is not trading, it does not have any material credit risk exposure to any single receivable or entity. With respect to credit risk arising from the other financial assets, which comprise cash and cash equivalents, the Company’s exposure to credit risk arises from the possibility of default of the counter party.

Liquidity risk The table below reflects all contractually fixed pay-offs and receivables for settlement from recognised financial assets and liabilities, including derivative financial instruments as of 30 June 2009. The amounts disclosed are undiscounted cash flows anticipated to eventuate in the next fiscal year. Cash flows for financial assets and liabilities without fixed amount or timing are based on the conditions existing at 30 June 2011.

The contractual maturities of the company’s financial assets and liabilities set out in the table are equivalent to the maturity analysis of financial assets and liability based on management's expectation. The risk implied from the values in the table reflects a balanced view of cash inflows and outflows. Fair value The methods for estimating fair value are outlined in the relevant notes to the financial statements, and unless specifically stated, carrying value approximates fair value for all financial instruments.

TOTAL < 6 Mths 6-12 Mths 1-5 Yrs >5 Yrs

Financial assets

Cash and cash deposits 1,606,800 1,606,800 - - -

Trade and other receivables - - - - -

Financial liabilities

Trade and other payables 1,641,560 1,641,560 - - -

Borrowings 434,205 434,205 - - -

Net maturity (468,965) (468,965) - - -

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Capital management The Company’s objective is to maintain adequate funding of its activities in an effort to ensure it continues to operate as a going concern. Capital financing has been derived from issues of ordinary shares and borrowings. Capital management is a process of monitoring financial risks, cash reserves, and forecast cash requirements, and responding to changes through management of equity funding and debt. There are no externally imposed capital requirements. There have been no changes in the strategy adopted by management to control the capital of the company. The company’s activities are funded from loans and cash. There are no unused credit facilities.

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3 REVENUES AND EXPENSES

Consolidated

2011 2010 $ $

REVENUE

— Interest received 846 271

Total Revenue 846 271 EXPENSES

Finance costs – interest paid to other persons 9,574 1,417

Employee benefits – Directors fees 12,500 19,500

4 INCOME TAX

The components of tax expense comprise:

Current tax - -

Deferred tax - -

Income tax expense reported in the income statement - -

The prima facie tax on loss from ordinary activities before income tax is reconciled to the income tax as follows:

Prima facie tax payable on loss from ordinary activities before income tax at 30% (2010: 30%) (72,856) (26,820)

Add tax effect of:

Deferred tax assets not recognised 72,856 26,820

Income tax attributable to entity - -

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5 EARNINGS (LOSS) PER SHARE

The following reflects the income and share data used in the basic and diluted earnings (loss) per share computations:

Consolidated

2011 $

2010 $

Net loss (242,854) (89,402) Number Number Weighted average number of ordinary shares for basic earnings per share 12,407,288 50,832,675Effects of dilution: Share options - -Weighted average number of ordinary shares adjusted for the effect of dilution 12,407,288 50,832,675Options on issue have been determined to be not dilutive, as a loss was incurred during the year. There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of these financial statements, other than as disclosed in note 11.

6 CASH AND CASH EQUIVALENTS

Cash on deposit earns interest at floating rates based on daily bank deposit rates. At balance date the weighted average interest rate is 4.2% (2010: 0.4%). The fair value of cash at bank approximates the carrying amount, in view of the short term to maturity.

a) Reconciliation to Cash Flow Statement For the purposes of the Cash Flow Statement, cash and cash equivalents are as disclosed in the balance sheet.

b) Reconciliation of net loss after tax to net cash flows from operations Consolidated

2011 2010 $ $

Cash and cash equivalents 1,606,800 50,413

Net loss (242,854) (89,402)

Changes in assets and liabilities (Increase)/decrease in trade and other receivables (102,053) 5,736 (Decrease)/increase in trade and other payables (75,614) 26,163

Net cash (used in) operating activities (420,521) (57,503)

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7 TRADE AND OTHER RECEIVABLES

Consolidated

2011 $

2010 $

CURRENT Prepayments 107,330 - Other receivables 12,181 17,458

119,511 17,458 (i) The fair value of receivables approximates the carrying amount, in view of the short term nature of

the receivables. (ii) The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as

security. (iii) Information regarding interest rate and liquidity risk is included in note 2.

8 PARENT ENTITY INFOMATION

Parent entity

2011 2010

$ $

Results of the parent entity

Loss for the year 242,008 89,402

Other comprehensive income - -

Total comprehensive loss for the year 242,008 89,402

Financial position of the parent entity at year end

Current Assets 1,726,311 67,871

Total Assets 1,726,311 67,871

Current Liabilities 2,075,765 174,471

Total liabilities 2,075,765 174,471

Total equity of the parent entity comprising of:

Share Capital 8,383,694 8,383,694

Reserves 979,952 979,952

Retained Earnings (9,713,100) (9,470,246)

Total Equity (349,454) (106,600)

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9 TRADE AND OTHER PAYABLES

Consolidated

CURRENT

2011 $

2010 $

Unsecured liabilities

Share Application monies received 1,606,760 66,712

Trade Payables 792 66712

Accrued expenses 34,008 43,702

1,641,560 110,414

(i) Trade payables are non-interest bearing and are normally settled on 30-day terms. The fair value of

trade payables approximates the carrying amount due to the short term nature of the trading terms. (ii) Information regarding interest rate and liquidity risk is included in note 2.

10 BORROWINGS

Consolidated

2010 $

2009 $

CURRENT

Related Party Loan 434,205 64,057

434,205 64,057 Terms and conditions of Related Party Loan The loan has been advanced by Coalworks Limited under the terms of an Equity Loan Facility Agreement, which is provided for in the Framework Agreement disclosed in Note 1. The loan is to be discharged by issue of fully paid ordinary shares, as approved at the general meeting on 30 November 2010. Interest is calculated monthly at 9.5%pa and accured.

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11 ISSUED CAPITAL AND RESERVES

2011 2010

$ $

Ordinary shares issued and fully paid 8,383,694 8,383,694

Shares Number of Shares $

Movement on ordinary shares on issue

Balance at 30 June 2009 46,784,055 8,362,642

Shares issued in Placement October 2009 7,017,608 21,052

Balance at 30 June 2010 53,801,663 8,383,694

Consolidation at 5:1 (43,041,170) -

Issues approved at General Meeting on 30 November 2010 in relation to re-organisation and restructure of company 4,587,500 -

Balance at 30 June 2011 15,347,993 8,383,694

Options 2011 Number of

Options

2010 Number of

Options

Movement in options on issue

Opening balance 27,558,748 27,558,748

Consolidation at 5:1 (22,046,998) -

Issues approved at General Meeting on 30 November 2010 in relation to re-organisation and restructure of company 15,043,750

20,555,500 27,558,748

Options expired on 31 December 2010 (3,845,084) -

Balance 30 June 2011 16,710,416 27,558,748

On 30 November 2011 shares and options were issued to various parties for services regarding the proposed company reorganisation. These Shares and options were granted for nil consideration. As the company was in administration and the company’s shares had not publicly traded for a considerable time the shares and options over those shares were assessed as having a Nil intrinsic value.

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11 ISSUED CAPITAL AND RESERVES (continued)

The following issues of shares and options were made in relation to the post balance date events detailed in note 13: Issue of 25,000,000 shares and 12,500,000 options in consideration for the acquisition of Orpheus

Energy Pty Ltd and related coal projects and assets; Issue of 10,000,000 shares and 5,000,000 options in consideration for conversion of equity loan

facility Issue of 34,500,000 shares and 17,250,000 options in consideration of conversion of convertible

notes Issue of 30,000,000 shares to public investors and underwriters of issue Issue of 588,731 options to public investors Issue of 1,425,000 options to employees and consultants

Nature and purpose of reserves Share option reserve This reserve is used to record the value of share options issued in consideration for services rendered.

12 COMMITMENTS AND CONTINGENCIES Capital commitments

At 30 June 2011 there were no material capital commitments outstanding. Contingent Liabilities Since the last annual reporting date, the directors are not aware of any material changes in any commitments and contingencies the company.

13 EVENTS AFTER BALANCE DATE On 17 August 2011 the company completed the arrangements and requirements for re-listing after balance date, and trading in the company’s shares was reinstated on ASX. The following transactions anticipated by the Framework Agreement which were conditional on re-listing were concluded after balance date on 8 August 2011 Acquisition of Orpheus Energy Pty Ltd Conversion of equity loan to shares Conversion of convertible notes to shares Placement of 30,000,000 shares with attaching options at an exercise price of $ 0.20. Dividend by Coalworks of a portion of its holding in the Company On 23 September 2011, Coalworks Limited distributed 17,725,185 shares it held in Orpheus Energy Limited, to Coalworks Limited shareholders in the form of an unfranked dividend. F

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13 EVENTS AFTER BALANCE DATE (continued) The following issues of shares and options were made in relation to the post balance date events noted above:

Issue of 25,000,000 shares and 12,500,000 options in consideration for the acquisition of Orpheus Energy Group Pty Ltd and related coal projects and assets;

Issue of 10,000,000 shares and 5,000,000 options in consideration for conversion of equity loan facility

Issue of 34,500,000 shares and 17,250,000 options in consideration of conversion of convertible notes

Issue of 30,000,000 shares to public investors and underwriters of issue Issue of 588,731 options to public investors Issue of 1,425,000 options to employees and consultants

On 22 September 2011The Company announced that it has secured a 51% equity ownership in two additional tenements in East Kalimantan Province under its joint venture agreement with strategic alliance partner Pt Mega Coal International 14 IN SPECIE DISTRIBUTION BY COALWORKS

Dividend by Coalworks of a portion of its holding in the Company On 23 September 2011, Coalworks Limited distributed 17,725,185 shares it held in Orpheus Energy Limited, to Coalworks Limited shareholders in the form of an unfranked dividend.

15 RELATED PARTY DISCLOSURES

(a) Subsidiaries The subsidiaries of Orpheus Energy Limited (formerly Australian Motor Finance Group Limited), the ultimate Australian parent entity, are listed in the following table:

% Equity

interest Investment $

Name Country of

incorporation 2011 2010 2011 2010 Australian Motor Finance Limited** Australia - 66.3 - 6,980,736Bushveld Exploration (SA) (Pty) Ltd South Africa 100 100 20 20

20 6,980,756 ** Australian Motor Finance Ltd is in the process of being wound up by the Administrators. (b) Key management personnel

Details relating to key management personnel, including related party transactions are included in Note 15. Mr. Wayne Mitchell is a director and executive chairman of Orpheus Energy Limited and Director/Chairman of Coalworks Limited. Coalworks Limited has advanced $434,205 as at 30 June 2011.

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15 DIRECTORS AND EXECUTIVE DISCLOSURES

(a) Details of Key Management Personnel

Mr Wayne Mitchell, Chairman (appointed 30 November 2010) Mr Wesley Harder, Executive Director &

Exploration Manager (appointed 30 November 2010) Mr Anthony King, Non-executive director (appointed 30 November 2010) Mr David Smith (appointed 18 August 2011) Mr David Hickie, Non-executive Director (resigned 30 November 2010) Mr Bruce Andrew, Non-executive Director (resigned 30 November 2010) Mr Ilmars Draudins, Non-executive Director (resigned 30 November 2010) Mr Mark Menzies, Non-executive Director (resigned 30 November 2010) Mr Jon O’Callaghan, Non-executive Director (resigned 30 November 2010)

(b) Compensation of Key Management Personnel


Parent Entity

2011

$

2010

$

Short term employee benefits 12,500 19,500 Post Employment benefits - - Share-based payment - - 12,500 19,500

(c) Option holdings of Key Management Personnel

Options holdings of Key Management Personnel for the year ended 30 June 2011

Vested at 30 June 2011

30 June 2011

Balance at beginning of period 01-Jul-10

Held at date of

appointment resignation

New Issues Balance at end of period

30-Jun-11 Total

Vested Exercisable

Not Exercisable

(under escrow per ASX)

Wayne Mitchell - - 3,000,000 3,000,000 - - 3,000,000 Wesley Harder - - 1,500,000 1,500,000 - - 1,500,000 Tony King - - 1,000,000 1,000,000 - - 1,000,000 David Hickie - - - - - - - Bruce Andrew 396,436 (396,436) - - - - - Ilmars Draudins - - - - - - - Mark Menzies 328,075 (328,075) - - - - - Jon O’Callaghan - - - - - - - Total

724,511 (724,511)

5,500,000 5,500,000 - -

5,500,000

(i) No options were exercised during the year ended 30 June 2011.

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15 DIRECTORS AND EXECUTIVE DISCLOSURES (continued)

Options holdings of Key Management Personnel for the year ended 30 June 2010

Vested at 30 June 2010

30 June 2010

Balance at beginning of period 01-Jul-09

Held at date of


Balance at end of period

30-Jun-10 Total

Vested Exercisable Not

Exercisable Directors David Hickie - - - - - - Bruce Andrew 396,436 - 396,436 - - - Richard Green - - - - - - Ilmars Draudins - - - - - - Mark Menzies

- 328,075 328,075 - - - Jon O’Callaghan - - - - - - Total

396,436 328,075 724,511 - -

-

(d) Shareholdings of Key Management Personnel Shares held in Orpheus Energy Limited (formerly Australian Motor Finance Group Limited) for the year ended 30 June 2011 (number)

30 June 2011

Balance at beginning of period 01-

Jul-10

Held at date of


Consolidation 1:5

Purchased on market


30-Jun-11 Directors Wayne Mitchell - 1,511,210 (1,208,968) - 302,242Wesley Harder - 1,511,210 (1,208,968) - 302,242Tony King - 1,511,210 (1,208,968) - 302,242David Hickie - - - - -Bruce Andrew 792,872 (792,872) - - -Richard Green - - - - -Ilmars Draudins - - - - -Mark Menzies 656,150 (656,150) - - -Jon O’Callaghan - - - - - Total

1,449,022

3,084,608

(3,626,904)

-

906,726

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15 DIRECTOR AND EXECUTIVE DISCLOSURES (continued) Shareholdings of Key Management Personnel (continued)

Shares held in Australian Motor Finance Company Limited for the year ended 30 June 2010 (number)

30 June 2010

Balance at beginning of period 01-

Jul-09

Held at date of


Purchased on market


30-Jun-10 Directors David Hickie - - - - Bruce Andrew 792,872 - - 792,872 Richard Green - - - - Ilmars Draudins - - - - Mark Menzies - 656,150 - 656,150 Jon O’Callaghan - - - - Total

792,872 656,150

-

1,449,022

16 AUDITORS’ REMUNERATION

The auditor of Orpheus Energy Limited (formerly Australian Motor Finance Group Limited) is Hall Chadwick

Parent Entity

2011

$

2010

$

Amounts received or due and receivable by Hall Chadwick for: An audit or review of the financial report of the entity 15,000 10,000 Other services in relation to the entity - -

15,000 10,000

17 SEGMENT NOTE

As the Company did not trade in its own right during the reporting period, no segment information is reported.

18 CORPORATE INFORMATION

Registered office and Principal place of business

Level 5 44 Miller Street North Sydney NSW 2060 T 61 2 9922 3930 F 61 2 9929 6820

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Directors’ Declaration

In accordance with a resolution of the directors of Orpheus Energy Limited, the directors of the Company declare that: 1 Due to the circumstances described in Note 1 to the financial statements, it is not possible to state that:

the financial statements and notes of the entity are in accordance with the Corporations Act 2001, including: i giving a true and fair view of the financial position as at 30 June 2011 and the performance for the

half year ended on that date of the Company; and

ii comply with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001;

2 Notwithstanding the circumstances described in Note 1 to the financial statements, the company has been successfully reinstated to quotation on ASX and pursuant to the associated capital raising, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

3 Due to the circumstances described in Note 1 to the financial statements, it is not possible to state that:

a) the financial records of the company for the financial period have been properly maintained in accordance with section 286 of the Corporations Act 2001; b) the financial statements and notes for the financial period comply with Accounting Standards; and c) the financial statements and notes for the financial period give a true and fair view.

On behalf of the Board Wayne Mitchell Director Sydney, 30 September 2011

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ASX Additional Information

Additional information required by the Australian Securities Exchange and not shown elsewhere in this report is as follows. The information is current as at 29 September 2011. (a) Distribution of equity securities 114,847,993 fully paid ordinary shares are held by 2,480 individual shareholders. All issued ordinary shares carry one vote per share and carry the rights to dividends. The number of shareholders, by size of holding, in each class are:

Holdings Ranges Holders Total Units % 1-1,000 966 407,528 0.355

1,001-5,000 739 1,681,136 1.464 5,001-10,000 251 1,969,699 1.715

10,001-100,000 385 13,832,040 12.044 100,001-9,999,999,999 139 96,957,590 84.423

Totals 2,480 114,847,993 100.000 Holding less than a marketable parcel 1,641

Option (b) Substantial shareholders aid O

Name Number Percentage Coalworks Limited 38,296,367 33.35

(c) Twenty largest holders of quoted equity securities

Ordinary shareholders Fully Paid Number Percentage

1. COALWORKS LIMITED 38,296,367 33.35 2. MR PAUL FILLION & MS SALEE CHUTINTON 5,000,000 4.35 3. BOARDWALK RESOURCES PTY LTD 3,708,587 3.23 4. MR CHARLES L HYLAND 3,000,000 2.61 5. CENTRE CAPITAL (NEWCASTLE) PTY LTD <CNTR CAP NEWCASTLE

UNIT A/C> 2,500,000 2.18 6. UNITED NOMINEES PTY LTD 2,000,000 1.74 7. SEPT ROUGES LIMITED 1,750,000 1.52 8. OCTOPI ENTERPRISES PTY LTD 1,717,841 1.50 9. RODBY HOLDINGS PTY LIMITED <SIN PYNG TENG SUPER FUND

A/C> 1,653,693 1.44 10. MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED 1,618,772 1.41 11. MS YUJUAN WU 1,300,000 1.13 12. WEXFORD SPECTRUM TRADING LIMITED 1,200,000 1.04 13. NATIONAL NOMINEES LIMITED 1,152,807 1.00 14. AUSTRALIAN FEATHER MILLS PTY LTD 1,070,000 0.93 15. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 3 1,058,203 0.92 16. AB OVERELL SHOES PTY LTD <AB OVERELL SHOES S/F NO2 A/C> 1,034,305 0.90 17. MS LI SHENG YU 1,000,000 0.87 18. MS SHUNYI HU 1,000,000 0.87 19. JEREMY NOCKLES PTY LTD <JEREMY NOCKLES S/F A/C> 1,000,000 0.87 20. MACQUARIE BANK LIMITED <METALS & ENERGY CAP DIV A/C> 862,634 0.75

Total of top 20 Holders 71,923,209 62.62 Total Issued Capital 114,847,993

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ASX Additional Information

d) Unquoted Securities

UNQUOTED SECURITIES

Number of

Holders

Number ofSecurities on Issue

Holders Holding more than 20% of each class

Number Held

Options Exercisable at $2.63 on or before 8 September 2012

4 1,619,049 MALACHITE ENTERPRISES LTD 288,889

MP CAPITAL PTY LTD 507,937

SUPER ALLOYS AFRICA LIMITED 793,651

Options Exercisable at $2.63 on or before 15 December 2011

2 47,620 MR WAYNE KERNAGHAN 23,810

MR MARTIN WILLIAMSON 23,810

Options Exercisable at 20 cents on or before 30 September 2014

8 12,750,000 N/A N/A


7 1,675,000 N/A N/A

Options Exercisable at 25 cents on or before 4 August 2014

1 1,000,000 BBY Limited 1,000,000

e) Securities subject to escrow

SECURITIES SUBJECT TO ESCROW

Ordinary Shares 20,250,000 restricted until 22 December 2011

17,401,380 restricted until 17 August 2013

Options exercisable at 20 cents on or before 31 December 2011

10,125,000 restricted until 22 December 2011


Options Exercisable at 25 cents on or before 4 August 2014




OTHER INFORMATION

There is no current on-market buyback of the Company’s securities.

The Company has used the cash and assets readily convertible to cash that it had at the time of admission in a way consistent with its business objectives.

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